Golden Visas and Paraguayan dual residency

Golden Visa Requirements & Benefits

Not every nation offers Golden Visas, and the conditions to be met to acquire them vary from country to country. Generally speaking, in order to apply, the most common route for applicants is to purchase real estate in the country in question, with the minimum cost often as high as $2 million USD. Applicants may also be given the option to make a capital investment in a company’s shares or stocks, or in the destination country’s public debt or government bonds. They can also apply on the basis that residency would allow them to create employment opportunities, or contribute to scientific or technological innovation in the destination country.

In order to be eligible for a Golden Visa, applicants must personally own the money they wish to invest, and need to maintain the investment for a minimally-required amount of time. They also typically need to be able to prove they have acquired the money legally, and display a clear criminal background. Applicants also need to demonstrate they have sufficient funds to sustain themselves and their family, even if they do not intend to live in the destination country full-time.

Successful Golden Visa applicants and their families have the legal right to reside in their new home country, as well as access to education and healthcare facilities. While Golden Visa automatically come with a residence permit, acquiring citizenship in the destination country can take a little longer, and holders only become eligible once they have lived in the destination country for several years.

Paraguay Residence by Investment Program

Paraguay – a landlocked country in the heart of South America, close to neighbours and trading partners including Uruguay, Brazil and Argentina – is not usually included on the list of countries that offer Golden Visas to prospective dual residents. Indeed, the country is gaining prominence as one of the cheapest and easiest places in the world in which to establish dual residency, regardless of income, and is instead included on the list of countries providing so-called Independent Means Visas.

To qualify for dual residency in Paraguay, applicants must simply submit the requisite paperwork – passport, birth and/or marriage or divorce certificate, a clean police record and a special document issued by the Identifications Department of Paraguay’s National Police – and make an initial trip to the country for the early stages of the process. Applicants are asked to make a payment of PYG 28.4 million (equivalent to $4,200 USD) to the National Bank to demonstrate solvency. These funds can be withdrawn once the process is complete, which typically takes up to three months.

That being said, Paraguay also offers a fast-track program for foreign investors under the national Unified System of Opening and Closing Companies (SUACE), which is similar in scope to the traditional Golden Visa. The program deals with company formation as well as residency, and can reduce the permanent residency process to as little as 20 days, with a qualifying investment for individuals of at least $10,000 USD in a Paraguayan bank account.

This Residence by Investment Program – not technically a residency by investment program so much as an entrepreneur immigration scheme – is probably the most affordable immigration solution for foreign investors in the whole of South America. In terms of company investment, the contributed capital must be at least $70,000 USD, and applicants will have ten years to spend it on their business or investment project.

Once successful, foreigners will receive a Paraguay investment visa and can enter the country, at which point the company should be formed and the application for a permanent residence permit submitted. In addition to standard requirements, applicants for the Residence by Investment program need to submit a certificate issued by the Vice Ministry of Industry and Commerce of Paraguay, approving their qualification to SUACE.

There is no official citizenship by investment programme in Paraguay, but the Residence by Investment program can lead to citizenship in the same way as regular dual residency – permanent residents of Paraguay can apply for citizenship status after three years, although the naturalization process can take another two years. However, it is worth remembering that dual nationality is permitted under the constitution of Paraguay on a reciprocity basis, which means that unless Paraguay has a bilateral agreement with another nation, the other nationality is not permitted.

Tax benefits for dual residents

Many people – and especially Gold Visa applicants – are interested in setting up dual residency in another country for tax reasons, and Paraguay is one of the best countries in the world to do so for that purpose. Settling in Paraguay is relatively straightforward, and the country has a very favourable territorial tax system, which means that offshore revenues are not eligible for taxation, while net income from within the country is only subject to a 10% tax rate.

Until very recently Paraguay was – technically speaking – a tax haven, without the stigma usually associated with such territories: the government simply did not implement any kind of personal income tax, due to extremely lax national attitudes towards paying taxes. The national government eventually introduced the 10% personal income tax in 2012, but dual residents with no in-country income can still benefit from a 0% local tax.

In Paraguay, an individual is considered to be tax-resident if they spend more than 120 days per year in the country. Tax-residents and non-residents alike are subject to personal income tax on their Paraguayan-source income, which is taxed at 10% if income is equal to or higher than 120 monthly minimum salaries – otherwise it’s taxed at 8%. Capital gains, interests, and royalties are taxed at the standard rate. There are no taxes on inheritance and net worth. VAT standard rate is 10%, and a 5% reduced tax rate applies to the supply of certain goods and services.

Paraguay’s corporate income tax applies to all companies no matter what services or products they supply, but the rate is the lowest in Latin America: 10%, much lower than nearby economies such as Brazil and Chile, whose rates are around 30%. This means the country is actually better suited to attract foreign business than its more economically powerful neighbours. Value-added tax (VAT) is one of the lowest in the region too, so Paraguay is unarguably an attractive, welcoming environment for setting up a business, especially with an immigration programme tailor-made for foreign investors and entrepreneurs. Resident corporations are subject to a tax on their income derived from Paraguay at a flat rate of 10%, but Paraguay’s territorial tax system means that all offshore earnings are not taxable.

In addition to its attractive tax regime, Paraguay is a remarkably inexpensive country in terms of cost of living, even by South American standards. Foreign investors and residents can enjoy a comfortable lifestyle with much fewer resources than in the Western world: for example, cost of living in Paraguay is, on average, 57.2% lower than in United States, while rent is 76.4% lower in real terms. Water, gas and electricity are all extremely affordable and all the necessary provisions are readily accessible, even outside the major towns and cities, despite this low cost of living.

As we have seen, globetrotting foreign investors seeking dual residency for investment, business or tax purposes have every reason to consider Paraguay as their next stop. And the country’s Residence by Investment program, while not technically a Golden Visa initiative, is designed specifically to facilitate and speed up the entry of foreign residents and capital into the country. Once the process is complete, foreigners will be able to invest in a dynamic and upcoming market, as well as gain access to the financial giants of Mercosur, Latin America and beyond.

While settling in Paraguay is straightforward, especially for wealthy individuals and corporations, it pays to consider all the conditions for entry before committing to your next move. And considering the amount of investment involved in Golden Visa and Residence by Investment programs, most potential investors opt to hire dedicated professionals to guide them through the process and make sure everything goes according to plan. Strategicasa’s team of experts would be happy to help – get in touch today to find out more!